The direct EB-5 investment model has grown in popularity in recent months. Prior to its expiration in June 2021, the regional center model was the most common for EB5 investment projects. Historically, the regional center model had always been reauthorized and been able to continue, with the exception of a brief suspension in 2018. As of February 2022, however, the regional center program has been defunct for seven months, leaving thousands of EB-5 investors in processing limbo. Still, in the first two months of 2022, the direct EB5 investment model has raised millions of dollars and given much-needed hope to foreign nationals who dream of U.S. citizenship for themselves and their families.
The current investment threshold for direct EB-5 investments is $500,000. However, a leaked draft of an EB-5 reform bill mentioned the possibility of the investment threshold being raised to $700,000. This means that any foreign nationals who intend to pursue an EB-5 visa through a direct investment project should begin the process as soon as possible. This EB-5 reform is expected to be included in the upcoming March 11 appropriations bill, giving potential EB-5 investors only a few weeks to invest at $500,000.
When selecting an EB-5 investment project, potential investors need to keep in mind the requirements set out by United States Citizenship and Immigration Services (USCIS). In order to receive the EB-5 visa, investors must choose projects that adhere to the agency’s regulations.
Meeting USCIS Requirements
The EB-5 investment program was created in 1990 as a way for foreign nationals to pursue residency, and even U.S. citizenship, by investing in a project that creates jobs for U.S. workers. As such, the main USCIS requirement is for each EB-5 investment project to create a minimum of 10 jobs. In the direct investment model, these jobs must be continuous, full-time positions created directly by the new commercial enterprise (NCE) that last for a minimum of two years. It is important to note that there is no requirement for the jobs to be filled by the same employee during that time period, but they must be active for a full two years. In addition, job sharing agreements can be put into place to allow multiple employees to share a full-time role.
Another aspect for potential EB-5 investors to consider is the viability of the business in which they aim to invest. The business must be financially stable, with a solid business plan and proven financial viability, meaning that the business won’t be entirely dependent upon the foreign investors’ funds. Any business with previously denied I-526 petitions or with unreliable finances would not be a safe option.
Low Financial Risk
For many foreign nationals, the investment they make in an EB-5 project comprises the entirety of their family’s life savings. It is imperative, then, to invest in a project with a low financial risk. The safest investments are those that are made in businesses whose finances are not overly dependent on the EB5 investment funds. In the event of an I-526 denial, investors should also be able to quickly recover their initial investment.
The EB-5 industry has shifted to direct investment projects and has seen great success. As a result, this type of investment is now in high demand. Given the high likelihood of changes to the investment requirement after March 2022, foreign nationals who plan to begin the EB-5 investment process should secure legal representation and get started as soon as possible.
